Making Tax Digital (MTD) – Changes coming for Income Tax Reporting

Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC.

From 6 April 2026, some sole traders and landlords must use it, based on their total annual income from self-employment and property. (gov.uk)

Under MTD, affected individuals will need to submit four quarterly tax updates and an annual final declaration through MTD-compatible software, helping to make the tax reporting process more accurate and efficient.

The income threshold will be dropping for subsequent years to bring more taxpayers into this new reporting format from April 2027 and 2028.

Who will MTD for Income Tax affect?

From April 2026, MTD quarterly reporting will be required for self-employed individuals and landlords who have over £50,000 in business turnover, rental income or a combination of the two. This is based on the income reported on the tax return for the 2024/25 tax year.

From 6 April 2027, the threshold drops to £30,000 and drops again from 6 April 2028 to £20,000.

Whether you have exceeded the threshold is based on the business income and rental income reported on your Tax Return. If the income declared on your return exceeds the threshold then MTD quarterly reporting is required from the following 6 April.

For example, taxpayers with business and rental income over £50,000 on their 2024/25 tax return will need to report under MTD from 6 April 2026.

Taxpayers with business and rental income over £30,000 on their 2025/26 tax returns will need to report under MTD from 6 April 2027.

Does this change when I pay my tax?

No. The payment dates for tax will remain the same as they are under Self Assessment, being 31 January after the end of the tax year, and payments on account being due in July and January, as normal.

Who is exempt from MTD for Income Tax?

HMRC have confirmed a list of current exemptions as follows:

• Individuals that are non-UK resident (until April 2027).
• Trustees, including trustees of charities and non-registered pension schemes.
• Taxpayers with a Power of Attorney including personal representatives of estates.
• Non-UK resident foreign entertainers and sportspeople with no other income relevant to MTD.
• Practising member of a religious society whose beliefs are incompatible with using electronic communications/records.
• Taxpayers without a National Insurance number.
• Ministers of religion (until April 2029).
• Lloyd’s underwriters (until April 2029).
• Recipients of the Married Couple’s Allowance or Blind Person’s Allowance (until April 2029).

Please note: Some of these exemptions will need to be claimed, and further details will be provided once available.

What will I be required to do under the new MTD rules?

If you are within MTD you will be required to keep digital records of the date, amounts, and category of income and expenses for your business/rental.

Taxpayers will also no longer be required to submit an annual Self Assessment Tax Return and will instead be required to submit four quarterly updates, using MTD compatible software.

At the end of the tax year, you will also be required to submit a final declaration which includes details of all other income and gains, similar to a tax return.

The final declaration will be due for submission by 31 January following the end of the tax year, as per the existing Self Assessment Tax Return filing deadline.

Each quarterly submissions report the cumulative income and expenses for that quarter and the earlier quarters for the tax year. This means that any adjustments to earlier quarters can easily be made in the following quarter.

The quarterly update periods and submission deadlines are as follows: